How Does Credit Repair Work?

Posted Jul 19 2010 by Marc Chasewith 0 Comments

Like most financial services credit repair isn’t a cookie-cutter, one-size-fits-all type of procedure.  Because sending a dispute letter might work for a small percentage of consumers, doesn’t mean that it’ll work for you.

What you want to do is figure out what approach is going to work best for your particular situation.  But to think that a company that only takes one approach to fix your credit is going to work is a risky proposition.  And one that'll probably fail and leave you aggravated with credit repair as a whole.

What is Your Circumstances?

Have you looked at your credit reports?  Do you know what’s holding your credit score down?  Is it late payments, collections, a tax lien?  Everyone’s credit profile is going to be different and as a result, so is the solution that’s going to best repair your credit.

Each derogatory account on your credit report is probably going to need a different solution if you’re looking to improve your credit score.  Just trying to dispute every negative account, isn’t going to get you the results that you’re looking for.  And you’ll end up paying for months of service to see almost no change to your credit score.

Find a Complete Credit Repair Company

Good credit repair usually involves a range of credit repair tactics.  While disputing negative accounts has been advertized as the magical fix to your credit repair problems, the truth is that actually boosting your credit score takes a lot more than that.

Accounts that are yours may require letters sent to the creditors, or maybe you need debt relief too.  Potential lenders are going to want to see that not only that you’ve taken care of past credit card debt but that you’re currently using new credit responsibly.  Good credit repair services will help you get those new lines of credit that you need.  They’ll also layout a plan explaining where your credit card balances should be, and how to use your cards properly to max out those credit scores.

Taking the First Step

Deciding on the best credit repair services for your needs is going to take some work on your part.  Make sure you’re completely comfortable with the company you choose.  After all, you are investing your hard earned money to try and correct your financial future, not just to make someone else rich.

Credit repair is excellent at stopping any decrease in your credit score, but that’s usually where credit repair ends.  Excellent credit repair services won’t end there; they’ll explain exactly how to go about building a positive credit profile, improving your credit score in the process.

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How to Fix Credit – Credit Repair Starts at Home

Posted Jul 20 2010 by Marc Chasewith 0 Comments

A good number of Americans don’t completely understand what’s involved with credit repair so they hire a firm to handle it for them.  Or sometimes they bury their heads in the sand and never bother to look at their credit card debts at all.  The truth is that most ways to fix your credit begin with your daily financial routines.

Paying a credit repair services company to fix credit problems may help with a lot of the legwork that needs to be done during the repair process, but there are still tips that if you incorporate into your credit habits will have you maximizing your credit scores in months.

Tip #1: Pay Bills on Time

You might think that this is fairly obvious, but you’d be surprised how many consumers will simply overlook a monthly payment.  Missing just one monthly payment can lower your scores over 100 points and could stay on your credit reports for up to seven years.

Tip #2: Pay More than the Minimums

If you’re only paying the monthly minimums than you are spending more money over time because of interest rates and other fees that’ll add up.  With new credit card laws, the creditor has to breakdown exactly how much you’ll be paying if you were to just pay the minimum each month versus paying it off faster.  Be sure to read through your statements to see what you could be saving.

Tip #3: Keep Credit Card Balances Low

Ideally, you want to get your credit card balances below 20%.  This will indicate to lenders that now you’re using credit responsibly.  Maxed out cards tells them that you need that money and that you’re using your cards out of necessity, not convenience.  Plus, maxed out credit cards are often what lead consumers to need debt relief.

Tip #4: Don’t Close Old Accounts

A portion of your credit score is based on the average length of your credit history.  This means closing out older accounts, even if you’re not really using them, can actually hurt your credit score.  Ideally you want to use these cards occasionally to make sure that the lender doesn’t close them out either.

Tip #5: Read Your Credit Reports

You can’t know if your reports are reporting negative information if you never look at them.  All three major credit bureaus – TransUnion, Equifax and Experian will allow you to pull your free credit reports every 12 months at annualcreditreport.com.  It’s free, so there’s no reason you shouldn’t at least be looking over them once a year.

Tip #6: Find Help if You Need It

You may not need to pay for credit repair services, these tips could boost your score to exactly where you need to be.  But if you’re ever confused or overwhelmed, there are tons of online help sites and credit repair forums you can use.

Tips Only Help if You Follow Them

I know that these tips are sometimes easier said than done, but when you’re being pre-approved for loans and credit cards or you’re being offered the best interest rates in the industry you’ll be glad that you were able to maximize your credit scores.  These tips usually involve a good amount of budgeting and saving, but if you’re committed to the process you should see positive results within a few months.

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Credit Repair Services Should Preach Budgeting

Posted Jul 20 2010 by Marc Chasewith 0 Comments

Budgeting might as well be a dirty word to most Americans, yet for those who have a financial plan in place their ability to improve their credit scores is amazing. While there’s no listing on your credit reports for whether you’re planning ahead with your finances or not, it’s usually obvious to lenders that you’re being responsible with your money.

Not running up your credit card debt has its advantages.  Not having to involve yourself with debt relief or deal with harassing phone calls.  Plus if you’re budgeting, you can avoid falling into a similar situation that’ll require credit repair. 

Budget and Save

The primary purpose of budgeting is to make sure that you are not living beyond your means. But in order to put a budget to good use, you need to make sure that you are saving money too. Generally, savings is used for retirement, or the purchase of a home, however having money for a potential financial disaster is just as important.

Consumers that are living paycheck-to-paycheck would be devastated if they were to lose their job or have to add another expense because of a family tragedy. These things happen to everybody. If you’ve put money away for a rainy day, then it may not be such a financial hardship.

Don’t Miss Payments

If you’re budgeting properly, then you should never miss a monthly payment on either a credit card or installment loan that you may have. Even if something happens to your income or expenses for a brief period, the fact that you’ve been squirreling money away will get you through that time without a payment slip up.

Just one missed payment can lower your credit score 50 points or more. That’s why it’s so important to make sure that you never miss a payment. A missed payment can lead to higher interest rates, which means paying more money each month, which leads to less money for savings. It’s a domino effect that can be completely avoided with suitable planning.

Pay Balances Down

If your credit cards are maxed out you’re walking a very fine line between building positive credit and being completely overwhelmed by your debts. Keep your balances as low as possible. Use your credit cards as a convenience, not as a necessity.

If a financial crisis does happen, you’ll be glad that your credit card balances have been kept low. You may need those credit cards for a few weeks to get you through this rough patch. If they’re maxed out though, not only is it going to be difficult to pay off, but you’ll find that you may have absolutely no money on hand.

Your balances also have an impact on your credit scores. Keeping them at less than twenty percent of their balances will almost certainly cause your score to creep upwards. While having high balances will usually do the exact opposite.

The Bottom Line

Too many people have no desire to break down their finances and really budget. But if you’re able to stick to it and avoid impulse purchases, your ability to increase you credit score is significantly higher than someone who isn’t planning ahead.

So many people think that credit repair is going to be the answer to their credit woes when being financially responsible is by far the better, safer approach. These are steps that need to be part of your everyday life; however, when you’re paying the lowest interest rates in the industry and you have a credit score that’s in the 800s, you’ll be glad you took the time to budget.

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Credit Repair Help

Posted Jul 21 2010 by Marc Chasewith 0 Comments

With so many businesses pulling credit reports it’s becoming more important that Americans address any credit problems that they currently have.  But is credit repair really the magical cure-all that many companies make it out to be?  In order to answer that question you need to understand what credit repair is capable of doing for you.

Can Credit Repair Erase Negative Info?

Yes and no.  Credit repair is meant to correct inaccurate or outdated information on your credit reports.  Many consumers, even many credit repair services companies, try to use this process of challenging accounts for every derogatory listing.  This is not what credit repair is supposed to be doing and will only create more problems.

If the negative accounts on your credit reports are wrong, then yes, credit repair can have them corrected and possibly removed.  Don’t think that you can go run up thousands of dollars of credit card debt, not pay, and then have a credit repair company magically remove those accounts.  It’s not going to happen.  You’re going to need debt relief for those debts.

Does Credit Repair Boost My Credit Score?

Comprehensive programs should have no problem improving your score.  However, removing negative items from your credit reports doesn’t usually increase your scores.  What’s more beneficial is establishing new, positive lines of credit and using it responsibly.  The credit repair process will often times include creating new credit lines to maximize your scores.

Can Credit Repair Be Done in 24 Hours?

Absolutely not.  Credit repair is a process that generally speaking takes 3 to 6 months. Of course this depends on how bad your credit really is.  But 24 hours is completely unreasonable.  Most correspondences with creditors, collection agencies and the credit bureaus are still done via regular mail and has a turnaround time of about 45 days.

Is it Worth the Money?

If done properly, then yes, it is.  Credit repair can get you approved for credit cards and loans, but it can also improve the interest rates on those loans & cards.  You can end up saving thousands a year in interest payments just because your score was a few points higher.  So while it is an investment, the money you save can far exceed the money you spent.

Where Would I Begin?

If you’ve never taken a look at your credit reports, then now’s the time.  All three major credit reporting agencies – Equifax, Experian and TransUnion – offer a free credit report every year.  It’s free at annualcreditreport.com.  Take them up on this offer and see what your credit profile is saying about you.  The sooner you start, the sooner you’ll reap the benefits of a high credit score.

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